Demand for Complementary Financial and Technological Tools for Managing Drought Risk: Evidence from Rice Farmers in Bangladesh

Patrick Ward (), David Spielman, David Ortega, Neha Kumar and Sumedha Minocha

No 204882, 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California from Agricultural and Applied Economics Association

Abstract: Financial and technological innovations that mitigate weather-related production risks have the potential to greatly benefit farmers in many risk-prone. In this study we examine farmers’ preferences for two distinct tools that allow them to manage drought risk: weather index insurance and a recently released drought-tolerant rice variety. We illustrate how these tools can independently address drought risk and demonstrate the additional benefits gained by combining them into a complementary risk management product. Findings indicate that farmers are generally unwilling to adopt the drought-tolerant variety independent of insurance, largely due to a yield penalty under non-drought conditions. When bundled with insurance, however, farmers’ valuation of the variety increases. Farmers value insurance on its own, but even more so when bundled with the drought-tolerant variety. The results provide evidence that farmers value the complementarities inherent in a well-calibrated bundle of risk management tools.

Keywords: Demand and Price Analysis; Food Security and Poverty; Risk and Uncertainty (search for similar items in EconPapers)
Pages: 39
Date: 2015-05
New Economics Papers: this item is included in nep-ias
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea15:204882

DOI: 10.22004/ag.econ.204882

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